Housing & Mortgage round up: House prices continue to rise, whilst the OFT warns people seeking a quick sale


Housing & mortgage round up_istockphotoA real mix of stories in this week’s housing and mortgage round up, including news that a major bank has been forced to write to over a quarter of a million of borrowers, whilst house prices continue to rise and the OFT issues a warning to people looking to sell their home quickly.

Santander told to contact over a quarter of a million borrowers

Santander has been told by the Financial Conduct Authority (FCA) to contact 270,000 borrowers, about unclear information sent before the bank increased the cap on its Standard Variable Rate (SVR) in 2008.

The FCA, which has now replaced the Financial Services Authority (FSA), said: “When Santander raised the cap it should have given affected borrowers clear information in easy to understand terms.”

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“But the letters it sent were not clear so borrowers may not have understood what was going to happen, how this was going to affect them and the options open to them. Some borrowers did not receive a letter at all.”

The cap is the maximum amount which a bank can increase their SVR to when a borrower’s mortgage product comes to an end.

Although Santander will be writing to affected customers to explain “what happened, what should have happened, and invite the customer to complain if they feel they have lost out financially”, it is unlikely many consumers will be entitled to redress.

The FCA said: “Whether borrowers have lost out financially will depend on the circumstances of their case”, whilst Santander said the majority of mortgage borrowers would not have suffered any financial detriment.

House price growth slows

New figures from the Office for National Statistics (ONS) show the rate at which house prices are growing has slowed slightly.

According to the ONS prices rose by 1.9% between February 2012 and February 2013, down from 2.2% in the 12 months to January 2013.

As is the case with any house price survey, the headlines mask the regional differences, with prices in London rising by 5.9% over the 12 months to February 2013, whilst other areas, including Scotland and Northern Ireland, have seen prices fall, by 1.2% and 1.7% respectively.

Asking prices rise sharply

In the same week as the ONS released their housing data, figures from the estate agent, Right Move, show sellers are pushing up asking prices, clearly confident the housing market is on the road to recovery.

According to Right Move, asking prices are up by 2.1% in April, following a rise of 1.7% in March and have risen for four months in a row. The average asking price for a house is now £244,706.

There was further good news for sellers, as Right Move report that the average time it takes to sell a property has fallen from 90 days to 80.

OFT warns consumers could be misled over ‘quick house sales’

As the housing market continues its fragile recovery and many borrowers have had to contend with unemployment and mortgage arrears, or have simply been unable to sell their home, some may have been tempted to use so called ‘quick sale’ companies.

However, the Office of Fair Trading (OFT) has warned this week that some consumers are potentially being misled.

‘Quick sale’ companies claim to be able to buy houses within a short period of time, often as little as seven days. However, the price sellers pay for a quick sale is generally an offer significantly below the market value, indeed the OFT has warned that losses could “be very high”.

The OFT has a number of concerns, including:

  • Unclear charging structures
  • Misleading sellers about the true value of a property
  • Unfair contracts, which restrict who the vendor can sell to
  • Falsely claiming to be a cash buyer

There have also been reports of unscrupulous companies dropping the price they will pay at the last minute, leaving sellers in an awkward position of having to back out of the sale or accepting a reduced amount.

Cavendish Elithorn of the OFT, said: “Businesses offering quick house sales may provide a useful service for homeowners who need to unlock cash in a hurry. However, they are often used by consumers in vulnerable situations and therefore we are concerned about the risk of consumers being misled and losing out on large sums of money.”

If you have used a ‘quick sale’ company the OFT would like to hear about your experience, they can be emailed at quickhousesales@oft.gsi.gov.uk

Nearly 50% of privately owned homes under occupied

Following the controversy of the so called ‘bedroom tax’ and on-going concern about a shortage of housing in the UK, new research from the Nationwide Building Society shows that nearly 50% of privately owned properties are under occupied.

According to the Nationwide, 49% of owner occupied homes have two or more spare bedrooms, compared to 16% in the private rental sector and 85% of privately owned homes had at least one spare bedroom.

It also appears that the homes are getting larger, with the size of the average home rising to 986 square foot, from 935 in 2001.

According to the Nationwide the increase is down to more people extending their homes: “26% of properties have been extended since their construction, while 5% have had a loft conversion. A further 16% of properties benefit from additional space through having a conservatory.”

Despite an aging population, bungalows seem to be less fashionable; the building society found that bungalows now make up just 9.7% of the housing stock, down from 11.4% in 1996. Housing experts believe that it has become harder to build bungalows due to changes to planning laws.

Our mortgage adviser, Linda Wood, is here to help you. If you would like advice on your options or you are affected by any of the stories in this week’s housing round up please call Linda today on 0115 933 8433, alternatively enquire online or email linda.wood@investmentsense.co.uk

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